UPDATE: Relay Therapeutics (RLAY) PT Lowered to $50 at JMP Securities After 4Q Update
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JMP Securities analyst Silvan Tuerkcan lowered the price target on Relay Therapeutics (NASDAQ: RLAY) to $50.00 (from $66.00) after the company offered a FY20 update with full-year opex of $139M and a YE20 cash balance of ~$678M (expected to support operations into 2024). In 2020, RLAY advanced RLY-1971 (SHP2 inhibitor) and RLY-4008 (FGFR2 inhibitor) into the clinic in solid tumors. In December, RLY-1971 (SHP2 inhibitor) was partnered with Roche/Genentech for $75M upfront plus additional potential milestones
and royalties. A key update is that Genentech will initiate an RLY-1971 and GDC-6036 (KRAS G12C inhibitor) combination trial. Recall that pre-partnership, RLAY anticipated Ph1 RLY-1971 data in 2021, but Genentech will likely not release an update from the ongoing Ph1 trial.
The analyst stated "We view the announced combination trial as a positive sign for RLY-1971. Regarding FGFR2, AACR will feature preclinical data for RLY-4008 (1455). Clinical data from the Ph1 trial is still expected in 2H21, which is RLAY's key milestone in 2021." "The continued work on additional oncology preclinical programs and extended work outside of oncology into genetic diseases leads us to increase our PoS of the pipeline to 33% from 25% previously. At the same time, increased volatility amongst small-cap biotechnology names leads us to increase our terminal value growth rate to -5% (from -2%). These changes and a higher average share count by YE21 lead us to lower our DCFderived price target to $50 from $66 previously. We maintain our Market Outperform rating with 40% upside to the current share price".
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